Shares of the provider of content delivery network services Limelight Networks, Inc. (LLNW) jumped 1.5% in Thursday’s pre-market trading session after the company inked a deal to acquire Moov Corporation in a cash and stock transaction worth $55 million.
Moov Corporation operates as Layer0 and provides infrastructure for sub-second dynamic websites.
Per the terms of the deal, Limelight will pay $32.5 million in cash and 22.5 million worth of common stock based on the 20-day volume-weighted average share price. In addition, Limelight will create a retention pool of restricted stock units worth $30 million to be allocated to the Layer0 team based on certain conditions.
The addition of Layer0 will enhance Limelight’s SaaS solution capabilities and will lead to incremental growth in revenue, margins, and EBITDA. Furthermore, it will also diversify Limelight’s client mix and services adding well-known brands to its existing portfolio.
Limelight CEO Bob Lyons commented, “The technology and development capabilities we are gaining will allow us to meaningfully accelerate our ability to transition Limelight to a leading edge SaaS provider.” (See LLNW stock charts on TipRanks)
He further added, “Together we will be able to drive better performance for our clients web applications, while improving developer productivity with our seamless end to end solution.”
The acquisition is expected to close in August, subject to certain regulatory approvals.
Goldman Sachs analyst Brett Feldman recently downgraded Limelight Networks from Hold to Sell and decreased the price target from $3 to $2.50 (4.9% downside potential).
Overall, the stock has a Hold consensus rating based on 1 Buy, 2 Holds, and 1 Sell. The average Limelight Networks price target of $4.33 implies 64.6% upside potential from current levels.
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